MCX may be restrained from launching fresh contracts

If Jignesh Shah-led Financial Technologies fails to cut its stake in MCX to 2% from 26% by 30th April, then FMC may restrain the commodity exchange from launching fresh contracts

Multi Commodity Exchange (MCX), the country's largest commodity exchange may be barred launching fresh contracts if it fails to bring down promoter’s stake to 2%. Jignesh Shah-led Financial Technologies India Ltd (FTIL), the chief promoter holds 26% stake in MCX.


Commodities market regulator Forward Markets Commission (FMC) might crack the whip on MCX in case the bourse fails to comply with its directive on reducing promoter shareholding which came in the wake of Rs5,600 crore payment crisis at National Spot Exchange Ltd (NSEL).


“FMC will take action against MCX if they do not comply with the shareholding order by 30th April. FMC is likely to stop MCX from floating new contracts,” an official said.


The commodity market regulator’s order has been challenged by the group in Bombay High Court.


In its order of 17 December 2013, FMC declared FTIL and its chief Jignesh Shah as 'unfit' to run any exchange following the turmoil at NSEL.


The regulator said FTIL was not ‘fit and proper’ to hold more than 2% stake in MCX.


Following this, the MCX board also asked its promoter FTIL to divest shares in excess of 2%.


The NSEL, which is promoted by FTIL, has been defaulting on payments to 13,000 investors. In July, FMC had halted trading at the exchange.


Multiple investigative agencies like Enforcement Directorate and the CBI are already probing the NSEL payment crisis, while Revenue department, Reserve Bank of India, SEBI, FMC and Ministry of Corporate Affairs are also looking into it.


Sensex, Nifty may face struggle to move up from here: Tuesday closing report

Short decline now on the Nifty may form a basis for pushing up of the index further

Indian market on Tuesday witnessed a highly volatile session. In line with the US and Asian markets where most of the indices closed in the red, the benchmark in India too ended in the negative after hitting an all time high.


The BSE 30-share Sensex opened at 21,948 while the NSE 50-share Nifty opened at 6,550. Sensex moved in the range of 21,917 and 22,080 and closed at 22,055 (down 0.27 points). Nifty moved between 6,545 and 6,596 and closed at 6,590 (up 6 points or 0.09%). The NSE recorded a volume of 69.43 crore shares.

Except for Energy (0.97%), IT (0.69%) and Media (0.14%) all the other indices on the NSE closed in the green. The top five gainers were Infra (1.38%), Realty (1.36%), PSE (1.24%), CPSE (1.11%) and Nifty Midcap 50 (1%).


Of the 50 stocks on the Nifty, 30 ended in the green. The top five gainers were Bhel (4.23%), DLF (3.61%), Hero MotoCorp (3.07%), Jindal Steel (2.87%) and Ranbaxy (2.48%). The top five losers were Reliance Industries (3.05%), Wipro (2.75%), Ambuja Cements (1.85%), Sesa Sterlite (1.77%) and M&M (1.48%).


Of the 1,564 companies on the NSE, 656 closed in the green, 811 closed in the red while 97 closed flat.


BHEL has received an order worth Rs3,000 crore from NTPC, for supply of steam generators for an upcoming power project in Odisha. It involves supply of 2x800 MW steam generators (boilers) with super critical parameters for the project at Darlipali in Odisha. BHEL (4.41%) was the top gainer in the Sensex 30 stocks which closed at Rs196.50 on the BSE.


Among the top laggers in the ‘A’ group on BSE yesterday, today was among the top five gainers. Financial Technologies rose 5% to close at Rs376.25 on the BSE. The company has entered into a share purchase agreement for sale of 13,64,787 equity shares of IEX to Golden Oak (Mauritius) Limited, for a consideration of Rs72.89 crore. The above said sale of shares was to comply with Central Electricity Regulatory Commission (CERC) Regulations to bring down the company’s stake in IEX to 25%. Subsequent to the above transaction, the shareholding of the company in IEX will be 28.49% and on fully diluted basis 25.64%.


Reliance Industries, the top loser in the Sensex – 30 stocks, fell as the Election Commission has reportedly ordered deferment of an increase in gas prices that was to take effect from 1 April 2014. Reliance Industries (2.87%) closed at Rs878.65 on the BSE.


The Bharatiya Janata Party (BJP) said the party will review the new gas pricing formula if elected to power after general elections. "If we are voted into power we would have to look at all the facts, all the realities on the ground, while keeping the interest of stakeholders in mind - in particular consumers. If this means going for a review we will review the pricing formula," Narendra Taneja, National Convener, Energy Cell, for the BJP said in an interview to a news agency.


US indices closed in the negative on Monday. Markit on Monday said its preliminary or flash PMI index tallied 55.5 in March, just slightly below February's nearly four-year high. Any number over 50 signals growth.


Most of the Asian indices closed in the red. Taiwan Weighted (up 0.98%) was the top gainer while Hang Seng (down 0.52%) was the top loser.


China's economy may still grow around 7.5% this year despite signs of a slowdown, and there is no immediate need for the government to roll out fresh stimulus measures, Asian Development Bank President Takehiko Nakao said on Monday.


SEBI tightens disclosure norms for mutual funds

MFs would be required to disclose certain additional details about their assets under management (AUM) as well as explain rationale behind exercising their voting rights in companies from 1st April

Market regulator Securities and Exchange Board of India (SEBI) has asked mutual fund (MF) houses to make monthly disclosures about assets managed by them and explain the rationale behind exercising their voting rights in companies. This is the part of a long-term policy issued by SEBI for mutual fund and would come into force from 1 April 2014.


The long-term policy for the over Rs9 lakh-crore MFs industry aims to make it an attractive investment proposition for retail investors and also provides for bolstering distribution channels. It has suggested selling of mutual funds through public sector banks and online to increase their penetration.


In a circular, SEBI said MFs would be required to disclose certain additional details about their assets under management (AUM) on a “monthly basis”. Besides, the data has to be put on a consolidated basis on the website of Association of Mutual Funds of India (AMFI) within seven working days of the month.


Also, MFs should disclose the rationale while exercising their voting rights in investee companies. “Asset management companies (AMCs) shall be required to record and disclose specific rationale supporting their voting decision (for, against or abstain) with respect to each vote proposal,” according to the SEBI circular.


Some of the important guidelines from SEBI are listed below:


Disclosure of AUM

(a) Disclosure of assets under management (AUM) on a monthly basis.


(b) The disclosures will include contribution of AUM from different category of schemes; top tier and other cities; sponsors and associates; entities other than sponsor and associates; investors type (retail, corporate, etc) in different scheme type (equity, debt, ETF, etc.); AUM garnered through sponsor group/ non-sponsor group distributors; and State-wise/Union territory-wise contribution to AUM.


(c) This information will be disclosed on the respective AMC’s website and on AMFI website.


 Disclosure of Voting Exercise

(a) AMCs will record and disclose specific rationale supporting their voting decision (for, against or abstain) with respect to each vote proposal.


(b) AMCs will publish summary of votes cast across all its investee companies and along-with break-up of for, against or abstained votes.


(c) AMCs will disclose voting exercises on their website on a quarterly basis, within 10 working days from the end of the quarter and also in their annual report.


(d) AMCs will obtain Auditor's certification on voting reports being disclosed by them which will be submitted to trustees and also disclosed in the annual report & website.


(e) Board of AMCs and Trustees will review and ensure that AMCs have voted on important proposals and the rationale recorded for vote decision is prudent and adequate.


Other Disclosures

(a) Mutual Funds will make available printed literature on mutual funds in regional languages.


(b) Mutual Funds will introduce Investor awareness campaign in regional languages both in print and electronic media.


(c) AMCs will develop a system for active support to PSU banks to distribute Mutual Fund products through them.


(d) Mutual funds will also provide an online investment facility on their websites




3 years ago

An AUM of around Rs.9 Lakh crore on the face of it looks impressive but how much of it is from retail investors is the real question. Investor category-wise disclosure (whether retail or corporate) and geographical AUM disclosure gives a true picture of penetration of mutual funds in the country.

Disclosure of basis of payment of commissions (money life pointed out repeatedly about the huge upfront commissions that are being paid to big distributors like banks and National distributors) would have been another important step in safeguarding the interest of small distributors / IFAs(consequently would have safeguarded the interest of retail or small investors whom the IFAs mainly serve). Transparency in payment of commissions would have certainly helped increase the penetration of Mutual Funds.



In Reply to CHILUKURI K R L RAO 3 years ago

Who will safeguard interest of small distributors/IFAs ?

& more importantly WHY?

Like everybody else IFAs must fend for themselves rather than waiting for a non-existent saviour.

Rather than risking their survival on trail commission, It is time for IFAs to become serious investors first & achieve financial freedom.

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